A slight dip in interest rates in June improved home buying conditions for some Canadians, with affordability increasing in nearly half of the nation’s major markets. The latest Ratehub.ca affordability report, based on real estate data from May and June 2024, found that the required income to purchase a house lowered in six of the 13 markets studied.
The average mortgage stress test rate slightly decreased to 7.47% from 7.49%, and the average five-year fixed mortgage rate was 5.47%. This, combined with softening home prices, improved affordability even in Canada’s priciest cities.
How Much Do You Need to Earn to Buy a Home in Canada?
Increased Income Requirements
- Halifax: The required income increased by $1,560 due to home prices rising by $9,600, bringing the average home price to $548,800.
- Edmonton: An additional $1,380 in income is needed because home prices jumped by $8,400.
Improved Affordability
- Hamilton: The required income dropped by $3,550, thanks to an $18,400 decrease in home prices.
- Toronto: High borrowing costs have slowed market activity, putting downward pressure on prices. However, the average home price remains above $1 million.
Future Prospects for Home Affordability
Affordability could improve further this summer. The next Bank of Canada announcement on July 24 might include another rate cut, depending on inflation and the economy. Recent data shows a slight increase in buying activity from May to June, indicating buyers are responding to lower interest rates.
Conclusion
The income needed to own a home in Canada varies significantly across different markets. While some cities like Halifax and Edmonton have seen an increase in the required income, others like Hamilton and Toronto have become slightly more affordable. Staying informed about market trends and interest rate changes is crucial for prospective homebuyers.
Source: Home affordability improved in June as interest rates dip | Ratehub.ca
Canada Housing Market 
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